News Corp. Said to Probe E-Mails, Private Detective Use at U.K. Newspapers

News Corp. (NWSA) is reviewing e-mails and interviewing reporters at its remaining U.K. titles for signs employees might have hacked into voice mails or e-mails, or hired private detectives improperly, two people familiar with the investigation said.

News Corp.’s internal probe of the Sun, the Times and the Sunday Times staff is expected to last beyond the end of the year and any evidence of wrongdoing will be turned over to the Metropolitan Police, said one of the people who declined to be named because details of the investigation are private.

The probe, led by law firm Linklaters LLP, will focus on the use of private detectives, knowledge of voice-mail hacking and other forms of electronic interception and cash payments, the people said. Linklaters is acting for News Corp.’s Management and Standards Committee, formed by the board after the company shut the News of the World tabloid amid claims that reporters hacked into voice mails and paid police for stories.

The internal investigation coincides with renewed pressure from shareholder groups on Chief Executive Officer Rupert Murdoch and his son, James, to step down. A U.K. parliamentary committee has said James will have to answer further questions about phone-hacking and yesterday asked Les Hinton, former CEO of Dow Jones & Co., to testify on Oct. 24.

A reporter at the company’s Sun newspaper, who declined to be identified because he wasn’t authorized to discuss internal company matters, said investigators have been studying staff e- mails to find links to phone-hacking. The reporter said the investigators were using keyword search terms in an effort to match them to illegal activities.

Assisting Police

News Corp. said it was investigating its other U.K. titles in a regulatory filing yesterday. Spokeswoman Miranda Higham declined to comment on them beyond the statement.

Paul Durman, a spokesman for the New York-based company’s Management and Standards Committee, declined to comment. Linklaters spokesman Rupert Winlaw declined to immediately comment.

News Corp. said in August that while the group is authorized to conduct investigations, its primary objective was to assist police and politicians conducting outside inquiries. The company also said the body wouldn’t probe what happened at the News of the World. News Corp. previously said it would review journalistic standards at its U.K. newspapers following the hacking scandal.

‘Decisive Actions’

The committee was formed in July after revelations that News of the World reporters hacked into the voice mail of murdered schoolgirl Milly Dowler for stories. A police investigation into phone hacking has led to at least 16 arrests, among them Andy Coulson, Prime Minister David Cameron’s former communications chief and an ex-News of the World editor.

“News Corporation has already taken decisive actions to hold people accountable and will take all prudent steps designed to prevent something like this from ever occurring again,” the company said in the statement.

Les Hinton, former executive chairman of the company’s British unit News International, will be questioned by the U.K. House of Commons Culture, Media and Sport Committee as part of its investigation into the scandal, the panel said. Hinton will appear via video-link.

James Murdoch, deputy chief operating officer of News Corp., appeared in July before the same committee and said repeatedly he didn’t know of widespread phone hacking at News of the World. He has been recalled to answer further questions later this year after his testimony was challenged by former executives at the U.K. newspaper unit.

Dropped BSkyB Bid

The scandal also forced News Corp. to drop a 7.8 billion- pound bid for full control of pay-TV operator British Sky Broadcasting Group Plc. (BSY) James Murdoch, facing investors at the annual general meeting next month, should step down as chairman of BSkyB, investor Franklin Resources Mutual Series said today.

“An independent chairman would be advisable,” Mutual Series Chief Investment Officer Peter Langerman said according to Franklin spokeswoman Lisa Gallegos. The Financial Times reported Langerman’s comments earlier.

Mutual Series owns about 3 percent of BSkyB, according to Bloomberg data.

News Corp. also said yesterday that calls by proxy advisory firm Institutional Shareholder Services for the ouster of 13 of 15 board members following the scandal are “misguided.” The compensation of Chief Executive Officer Rupert Murdoch is “aligned with performance,” it said.

Calls for Ouster

News Corp. has suffered financial consequences from the phone-hacking scandal that reflect a lack of oversight, said ISS, which advises more than 1,700 investors on corporate governance issues. It recommended investors vote against Rupert Murdoch, his sons James and Lachlan, and 10 other directors.

The members of the management and standards committee include William Lewis, News International’s former general manager and Simon Greenberg, News International’s former corporate affairs director. Jeff Palker, a third member, also serves as News Corp.’s general counsel for Europe and Asia.

Anthony Grabiner, a veteran commercial lawyer and a member of the U.K. parliament’s House of Lords, was hired as an independent overseer of the project. He reports to Joel Klein, a News Corp. board member. Klein discusses the committee’s findings with Rod Eddington, the lead director, twice weekly, the company said in the filing.

To contact the reporters on this story: Amy Thomson in London at athomson6@bloomberg.net;

To contact the reporter on this story: Tariq Panja in London at bbensch@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.